Are clusters and industrial districts really driving sustainability innovation?

Purpose The purpose of this study is to explore and conducts a critical literature review to answer a fundamental question in the industrial district literature: are clusters and industrial (clusters/IDs) driving sustainability innovation? By intersecting different yet related strands of literature, the authors take stock of what the authors know about sustainability innovation in clusters/IDs. Design/methodology/approach This paper reviews the literature for conceptualizing sustainability innovation in clusters/districts. Findings Insights point out that the sustainability innovation process (development and diffusion) in clusters/IDs and their firms couples into mainstream cluster/IDs framework; clusters/IDs enable sustainability innovation through usual mechanisms, fostering collective change toward sustainability innovation, vis-à-vis other settings and strengthening firm sustainability innovation and performance. Sustainability innovation in clusters/IDs requires coupling different multi-scalar institutional systems effectively, and the cooperation of local organizations and policymakers for co-designing dedicated policies. Collective actions are important and firm heterogeneity needs to be considered in the clusters/IDs framework. Originality/value This study is original because it provides state-of-the-art on sustainability innovation in clusters/districts, enabling the topic to advance in this direction.